Property taxes are easy to hate, and Texas property taxes are high enough to turn this civic irritation into a full-blown political issue.

So it makes news when a candidate for comptroller of public accounts — the state’s tax collector, treasurer and all-around ace of finance — is running around saying he would like to get rid of property taxes. Glenn Hegar, a state senator who won the Republican nomination for comptroller in this month’s primary, was unequivocal in his remarks about the fairness of those taxes at a Tea Party forum in February, as reported by the Killeen Daily ...

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Comments (54)

Double sales tax ... what can I get by without buying or can I buy outside of Texas?

March 28, 2014 @ 7:24 a.m.

hans5162 hans

Dumbest most unrealistic proposal ever. He's a drooling, lying idiot.

March 28, 2014 @ 8:53 a.m.

Stuart Greenfield

Under the Hegar "plan", according the Comptroller Combs, http://www.window.state.tx.us/taxinfo/incidence/incidence13/96-463_Tax_Incidence2013.pdf everyone making less than $136,000 would pay more in overall taxes. Looks like I'll have to see about finding a couple of additional jobs.

March 28, 2014 @ 8:55 a.m.

William Ardis

Sales taxes are regressive taxes. In the end it is another tax break for the wealthy while taking more from those who can least afford it.

He wants to abolish property tax, but have sales tax 20%. This is regressive plan. It will kill the poor. Maybe that's his real plan. Isn't he the author of HB2? Control of women and subjugation of poor seems to be a common theme within the Republican party. How much more are we going to take? Vote!

Just another of Hegar's Horrible Ideas. Imagine a $4 tax every time you spend $20 or $4,000 on a new $20,000 car and $12 on a $60 dress. It would soon add up to more than most of us now pay in property taxes......and it would do nothing for the millions of renters, unless you assume their landlords would voluntarily cut their rent.....big dream!

Hegar was saying he wanted to do it immediately. "Just do it", he told on group. But, when faced with the cost to the average citizen he has backed off to "studying" the idea. I wonder how many more of his Horribles he will try to slide away from as reality takes hold?

Absolutely NONE OF THIS will change that Texas doesn't have a state income tax and unless it does, ONE or THE OTHER (sales tax or property taxes) will remain at a national high. Take your pick. No one wants to be heard advocating for anything related to that dirty little 3 letter word....even me.... (t-a-x) but as many have said before, you can not "pay next to nothing" to support public government structure and then complain when the schools, roads and public health holds steady near the very bottom of the national average and the only decent medical care and education opportunities are private, only accessible to the wealthy, and run by for-profit businesses. Sigh.

We don't have state income tax but here is something newsworth: If they don't "like" their property taxes why do these idiots keep approving "bonds". Bonds will affect your taxes people! You can't vote to spend money unless you plan to pay for it.

Uhhhh what a disingenuous lead in. Texas Tribune ONCE AGAIN kissing the GOP's rear and misstating facts . Hegar...not cOLLIER... has actually stated SALES TAX should be RAISED. http://trailblazersblog.dallasnews.com/2014/03/hegar-who-once-urged-just-do-it-on-property-tax-abolition-now-more-cautious.html/

It would be interesting to see some actual examples. I see the screams that sales taxes are regressive, but when grocery items are not included, how does it really stack up? Right now our property taxes are very high, and thus act as a barrier to home ownership, especially for working class Texans. At least with sales taxes, you can choose not to buy something if you don't want to be hammered by the tax man. Property taxes hit you no matter what, and a lot of the proceeds do not go to your local school district, but to some other school district that has no accountability to you or others that are supporting them.

Tax what you want to discourage and incentivise what you want to encourage

Shift the incidence of taxation from targeting economic assets on the front-end in preference to the harvesting of taxes from the fruits of the economic activity generated by those economic assets on the back-end

Ensure that the taxation policy is equitable; ...

Note: if you like sales taxes, you ought to love the ""Fair Tax". (https://en.wikipedia.org/wiki/FairTax)

Making it harder for people to purchase things from small businesses. This is the tea party/republican idea of "business friendly." The best that they could do. Meanwhile, Perry is courting LARGE businesses, handing them lots of your hard-earned dollars and creating lots of low wage jobs to keep Texans poor. Nice work, guys.

In Texas, the bottom 20% (Income range < $18000) pay 8.2% of their income in state sales and excise taxes (together with other state taxes their total burden is 12.2 % of their income) while the top 1% (income range > $463,000) pays only %1 of their income in sales tax (their total burden is 3.3% of their income). This is regressive taxation, the poor have less just to buy items necessary to survive.

March 28, 2014 @ 6:22 p.m.

WUSRPH

What most people don't realize is that they ALREADY pay more in sales taxes than they do in property taxes. People don't notice because the sales tax is taken out a little at a time where property taxes come due only once per year. It may look like a larger amount but when you add up all those meals, clothing and other small purchases over a year's time, etc. the sales tax winds up costing you more than the property tax. Hegar's plan would just make it even more of regressive tax.

The last study of this ratio found that, for individual taxpayers, sales taxes are the leading tax, accounting for about 40 percent of the total taxes they pay each year. Property taxes are second at 33 percent and motor fuels taxes a distant third at 8 percent.

(Many people, especially those who pay into escrow accounts on home mortgages also don't even know how much their property tax is since it is taken out a little at a time, just like the sales tax.)

March 28, 2014 @ 7:41 p.m.

Rudy Gonzales

Abolishing the property tax relieves taxation from industries, corporations and large ownerships and transfers that cost directly onto you and me! Glenn Hagar is totally out of line and way off base trying to push this concept. Taxation in Texas is already too high and Hagar has no backing or support from everyday Texans. Mike Collier is an accountant with his feet in the real world, an independent Democrat with financial experience. Mike Collier is pro-business and anti-TEA party!

This article, and most of the comments, completely ignore the reality. None of us are talking about a 20% sales tax rate. We are talking about broadening the tax structure, and increasing the sales tax to about 9%, and cutting a lot of waste in govt spending. Simply cutting the waste in medicaid could eliminate the need for a property tax.

March 29, 2014 @ 5:41 p.m.

WUSRPH

Dream on Jim Baxa...Replacing the property tax will required BILLIONS more than cutting any waste could produce....and a 9% sales tax would still leave you billions and billions short.....(!% is worth about a billion from the estimates I have seen). You ARE TALKING ABOUT A 20% sales tax, like it or not.

March 29, 2014 @ 6:51 p.m.

audrey fisher

It appears that the consensus agrees, Texans really don't want a regressive SALES TAX. YET another reason to remove GOP from Management of the State.

March 29, 2014 @ 7:05 p.m.

WUSRPH

A little reality:

There is not space here to fully explain while Jim Baxa is so wrong when he says we could finance “replacing” all local property taxes with a 9% sales tax and cutting waste out of Medicaid , but a few facts might help put the validity of his claims in question.

First, property tax revenues in Texas total over $40 BILLION PER YEAR, with more than half being school district taxes. According to the State Comptroller, the state now takes in about $21.5 Billion in sales tax revenues at a rate of 6.25%. Adding an extra $40 billion to that to replace the existing local property tax would require that the STATE SALES TAX RATE be 23%....And this does not include the 2% LOCAL SALES TAX RATE. When that is added, the statewide rate would be 25%. (Sources: U.S. Census Bureau Census of Local Finances, Comptroller of Public Accounts and Tax Policy Report by Texas Tax Truth.)

Cutting “the waste in Medicaid” would not produce the funds. In fact, THE TOTAL AMOUNT OF STATE AND FEDERAL FUNDS for ALL the Health and Human Service programs offered by the State comes to only $37 BILLION PER YEAR. The State’s share of this comes to about $1 billion, The rest is FEDERAL FUNDS which we clearly could not use to replace local taxes. That means even if we cut every dollar the State spends on all these programs, we would still be $39 billion short of the cost of replacing local property taxes. We would have to CUT EVERY PENNY OF STATE & FEDERAL SPNDING ON ALL THESE PROGRAMS TO “REPLACE” the local property taxes.

Even if the “replacement” were limited to school property taxes only that would cost over $21 BILLION PER YEAR. According to the State Comptroller raising just that amount would require a STATE SALES TAX RATE of 16%...and with the local rate that would mean that you would be paying an 18% SALES TAX.

The only possible way to avoid that high of a rate would be to extend the sales tax to food and medicine (which are now exempt) and to virtually every service you can imagine. Even then the rate would still have to be much more than 9%.

Sorry, Jim but I understand that reality is hard to accept when someone wants something so much.

March 29, 2014 @ 8:54 p.m.

Jim Baxa

Wusrph, your numbers are way off. The state puts in 16.3B to Medicaid currently, which is going to increase. My proposal to broaden the tax base includes a sales tax on real estate transactions. A 9% rate on real estate would easily raise the balance. My truest preference would be to cut spending in all areas so that we could fund all levels of govt with a 5% sales tax, but most are not ready for this. My proposal to taxrreal estate transactions is my compromise.

March 29, 2014 @ 9:17 p.m.

WUSRPH

I doubled checked and you are partially right...I was off on the State Share of Medicaid. I cited only GR Dedicated funds which are just over $1 billion for the two year period (which we can round off to $500 million per year)...I overlooked the line for straight GR Funds which is $29.752 for the biennium. or about $15 to $16 Billion per year. So even if you cut out every dollar we spend on Medicaid, you are still more than $14 billion short of being able to replace the revenues raised by property taxes. I agree that you could raise a good deal by putting home sales and other real estate under the sales tax, however, you could also stop a lot of home sales from taking place.......I doubt they are going to write mortgages to cover the sales tax and you are going to a substantially increase the cost of a home....$9,000 bucks on a $100,000 home, for example. I just don't see that flying in the Leg. Nor do I see you being able to squeeze enough savings out of Medicaid to cover the difference. The best you could do was come closer to covering the cost of replacing only the property tax for schools. But you'd need $22 billion per year to do that.....We raise $21 with a 6.25 STATE sales tax so, without the substantial base broadening, you are talking about a 13 to 14% STATE SALES TAX, plus the 2% local. There is no way you can include food and drugs without starting riots.....and the rest, other than real estate, don't raise that much. (PS What are your numbers for a 9% on real estate transactions....both on total transactions and with an estimate for the transactions that will not take place because of the tax.) Also, what are you doing for the renters....40% of the population? Do you expect them to quietly sit by while they are asked to cover the cost of a repeal of property taxes on homeowners AND ALL OF BUSINESS and get nothing for it but a higher sales tax? Another riot! Sorry for the mistake on the Medicaid number...I just looked too quickly. However, you still have to show me how you are going to raise the $22 billion, much less the $40 billion a total replacement would require. Sorry we don't have space here to go into all of this in more details.

March 30, 2014 @ 5:32 a.m.

Carlos "Scooter" Griffin - Tax Payer-Gregg County

WSRPH and Baxa,

The need to reduce/eliminate Property Tax in Texas has been around since Bush was Governor and he empaneled a Blue Ribbon Committee that traveled the State on this very issue. Governor Bush had one stipulation; He would NOT consider any type of Income Tax.

Texas Population did not increase per the most recent Census. There are many reasons but one will surely be the Huge Tax posed to Property Owners.

Today, Texans can consider NEW taxes that could reduce if not eliminate Property Taxation. Two of the readily available NEW tax sources require legislation for us Texans to VOTE on.

Whether the sales tax is raised to 20%, 13% or 9%, it is still a regressive tax, and it will leave even less for the poorest to buy essential just to survive.

March 30, 2014 @ 12:16 p.m.

WUSRPH

One more point.....Jim Baxa proposes to expand the base of goods and services to which the sales tax is applied--specifically to real estate transactions---and says that will produce enough to cover the replacement of property taxes. Expanding the base would reduce the amount that the sales tax rate would have to be increased, but it is doubtful that it would produce what he expects. In fact, the State Comptroller did an Tax Equity Study for the last legislature that looked at how much more the sales tax would produce if ALL the exemption and excluded goods and services--including food and medicines---were taxed. It found that would increase the tax revenues by $37 billion in 2014. That is still $3 billion short of covering the cost of doing away with all property taxes. Even if EVERYTHING WAS TAXED, the sate sales tax rate would have to be increased to 7 to 7.5%, up from the current 6.25%, which, when the local 2% is added, gives you a rate of at least 9.25%....That is close to Baxa's rate but it would require taxing everything, not just real estate. This suggests his plan, at the best, might cover most of the school district property tax but would still leave local taxpayers paying $18 to $20 billion per year in property taxes PLUS a much bigger and much expanded sales tax.

March 30, 2014 @ 1:17 p.m.

Jim Baxa

wusrph, good discussion...I think this is helping us to think through things better. To answer your questions: I am unable to find data on the total sales of real estate in Texas, so I dont have an exact number. I can find quarterly sales numbers for houses only. I infer from that data that adding a sales tax on housing would cover about $30B of the existing property tax. Now, I understand that changing the tax on real estate from annual to at the point of sale will encourage people to buy and hold instead of buying and selling, so this will decrease that amount (but I have no clue by how much, nor do I think accurate estimates are likely). However, the buy and hold tendency would serve to increase values which would counteract the decrease in values from having such a tax.

Your numbers on the increase in sales tax revenue from broadening the tax base to ALL things is interesting. I have heard such numbers before, but I do not believe that they are capturing real estate sales tax revenues in those projections. Even if the numbers you gave are accurate, it would require only a state sales tax rate of 6.8% for a total tax rate of 8.8% to be revenue neutral with eliminating the property tax.

Other things to consider: by eliminating the property tax, you eliminate the need for counties to appraise properties. In the larger counties, this is a huge expense that they currently occur in order to tax property values. If you eliminate the millions of dollars that the 254 counties each spend, you save a lot of money.

Also, eliminating the property tax will spur the economy, so that we end up with more sales tax revenues. Some businesses will move here based upon the fact that the property tax is not burdening them anymore.

There are a lot of details that need to be worked through, but I am confident that this would work well.

March 30, 2014 @ 1:30 p.m.

Jim Baxa

Many here have claimed that the sales tax is regressive and therefore we should not increase our reliance on it. I don't believe that it is accurate to say that sales taxes are always regressive. Lets take a look at how it affects somebody from each class of people:Family A makes $20,000 per year (poor), spends $10,000 on rent (not taxed on sales), spends $5,000 on food (not currently taxed on sales), and spends $5,000 on everything else (taxed). At a sales tax rate of 10%, this family would pay $500 in taxes which is 2.5% of their income.Family B makes $50,000 per year (middle class), spends $12,000 on rent (not taxed on sales), spends the same $5,000 on non-restaurant food (not taxed on sales), and spends the remaining $23,000 on everything else (taxed). At a sales tax rate of 10%, this family would pay $2,300 in taxes, which is 4.6% of their income.Family C makes $100,000 per year (upper middle class), spends $24,000 on rent (not taxed), $5000 on non-restaurant food (not taxed, and $71,000 on everything else (taxed). At a sales tax rate of 10%, this family would pay $7,100 in taxes, which is 7.1% of their income.

You can clearly see that the richer one is, they generally pay a higher percentage in sales tax. The sales tax is not regressive. Now, it is less progressive than the income tax usually is set up to be, but the sales tax is still progressive.

The property tax is actually a regressive form of a tax. From our above example, the poor family would indirectly pay $1000 in property taxes (5% of salary), the middle class family would pay $2000 in property taxes (4% of salary) and the upper middle class family would pay $3000 in property taxes (3% of salary). The property tax hurts the poor the worst of all, but we usually feel better about it because it is indirect (they landlord pays the taxes and just charges more so the tenant does not realize they are paying).

Mr Baxa, et al. One might want to start at the original study on tax incidence, http://tinyurl.com/n3o37jd and then progress to the latest from the Comptroller's Office, http://www.window.state.tx.us/taxinfo/incidence/ , pg 45 and 62. What is quite obvious is that the state sales tax has been and continue to be a quite regressive tax. In fact, from the Comptroller's study, except for those w/ household incomes >$136,000, everyone other household pays a greater percent of their income in sales v. property tax. One should also note that the Suits Index is less for the property tax, indicating it is less regressive.

Your examples are interesting, but they conflict with all the studies I have seen. For example,Stuart Greenfield's suggestions, above, for places to look for answers on whether our taxes are regressive are not are more than worth taking a look at. They more than support that the sales tax is regressive.

March 30, 2014 @ 6:08 p.m.

William Ardis

The example with three people is unrealistic. All $ amounts for each category are guesses. For family C, they would most likely not be spending on $71,000 on taxable items, some would probably be going toward retirement accounts or savings accounts. Checking the tax incidence report that someone else provided the link to (thanks), it shows that the lowest quintile (income < $37,771) sales tax accounts for 7.1% of their income while for the top quintile (income>$136,297) sales tax accounts for %1.7. Sales tax is a regressive tax.

March 30, 2014 @ 6:36 p.m.

Jim Baxa

I understand that the rich are more likely to put money into savings and therefore not pay sales tax on it in that year, but they eventually spend their savings and get taxed at that time.

There is no way that the study claiming the poor pay 7.1% is accurate. It lacks face validity when you consider that the majority of their spending is on food and rent which is not taxed.

Also, remember that in a perfectly broad sales tax, there can be zero regressivity. All would be taxed at the same rate. One argument for exclusions is that it provides for the progressivity that some desire. I argue that the fairest way to tax is flatly, and in a way that people can choose not to pay it by not spending.

March 30, 2014 @ 6:42 p.m.

WUSRPH

Read the studies before you make definite statements condemning them. Plus do a google search on the same subject and you will come up with study after study that says sales taxes are regressive. I know you don't want to accept it, but that's just the way it is. Ours is less regressive than it could be ONLY because we do not tax food (except for immediate) consumption and medicines. Other state's do and as a result their taxes are more regressive than ours.

March 30, 2014 @ 6:44 p.m.

WUSRPH

P.S. The most recent Comptroller's study which you find objectionable was produced by a hardcore GOP State Officeholder who would have loved to be able to say that the sales tax was not regressive IF she could have found anyway to do it and retain any credibility for anything she ever said in the future. Even she had to accept the reality.

March 30, 2014 @ 7:21 p.m.

Jim Baxa

Neither of the studies linked to above delineate their methodologies for how they come up with the percent of income paid to each tax. There is a lot of valuable information included, but this piece of data is not shown to us. Therefore, the only logical reaction I can give is to assess the face validity. As I mentioned previously, there is no face validity to a claim that the poor are paying 7.3% of their income to a tax that maxes out at 8.25% when most of their spending is exempt from such taxes.

Now, it may be that these numbers include the fact that the poor tend to take in 10s of thousands of dollars more in welfare monies. These monies do not get added into their income lines, but could be taxed at the point of sale, therefore skewing the numbers. Either way, this is not a regressive tax.

March 30, 2014 @ 7:24 p.m.

Jim Baxa

Also, from the current year's comptroller report: the annual school property tax take is $22B and the decreased take due to sales tax exemptions is $36B. Therefore, if we eliminated all exemptions to the sales tax and eliminated the property tax, we would have a net increase in revenue of $24B (before we factor out changes in consumer behavior). This is all with staying with the current tax rate.

March 30, 2014 @ 7:47 p.m.

William Ardis

First, stop the bogus "poor taking 10's of thousands in welfare" (go do some research on that).

If the information from the comptroller was false, we'd have heard something by now (I think the reports are annual, I've seen them before and haven't heard anything over the years(and as it was pointed out, the comptroller's office is held by the GOP). The other study came from a tax policy think. I'll take their word over your examples.

Look, you don't want to accept the idea that sales taxes are regressive because that don't conform with your version of how the tax system is. But when several different sources (whether state agency, think tank, or economists) tell us sales taxes are regressive, then it is regressive.

March 30, 2014 @ 8:10 p.m.

Stuart Greenfield

Mr. Baxa, once again you are mistaken. Yes, the school property tax in 2011 was $22.0 billion, however, the total local property tax (city, county, other taxing districts) was $40.5 billion. Senator Hegar did say eliminate all property taxes, not just the school district levy. Also, concerning the methodology for determining tax incidence, you might read, http://tinyurl.com/n3o37jd which describes the methodology used in the first tax incidence study and which continues to be used by the Agency. If you'd like, email me at [email protected] and I'll be more than happy to point you to the information on consumption that underlies the estimate of consumption by income group.

March 31, 2014 @ 10 a.m.

WUSRPH

Sorry, Jim, but as they used to say in the Texas House when someone just refused to accept the facts: I am sorry, Sir, I can explain it to you, but I can not understand it for you.